• Meet David
  • Bio
  • An Interview with David K. Hurst (2006)
• About the Book
  • The New Ecology of Leadership
  • The New Ecology of Leadership: Author’s Q&A
  • Table of Contents
  • Book Excerpt
• Speaking
  • What You Can Expect – a Customized Learning Experience
  • A Sample of Presentation Topics
  • Endorsements
• Blog
• Education
  • Leading Forth
  • My Approach to Consulting
  • Strategy
  • Leadership
  • Change
• Writings
  • Articles
    • Academic Articles
    • Popular Articles
  • Books
    • Crisis & Renewal
    • Interview for Crisis and Renewal
    • Learning from the Links
    • Diary of a Reformed Duffer
  • Book Reviews
    • Best Books Essays
    • Book Reviews

Blog

← Older posts Newer posts →

“Horses for Courses”: Changing the Guard at Citibank

This week Vikram S. Pandit resigned suddenly as CEO of Citibank, together with his longtime lieutenant and business partner, John Havens, who was President and COO. Although Pandit claimed that he left voluntarily, it is clear that he and Havens were pushed by nonexecutive Chairman, Michael O’Neill. The separation of Chairman and CEO offices is still not the norm on Wall Street but advocates of it say that it is situations like this that underline its value. O’Neill, a career banker himself, appointed longtime Citi executive, Michael L. Corbat, as the new CEO. “There is a British saying about horses for courses,” O’Neill said, “and Mike Corbat has a sort of single-minded data approach that is right for the job today.”

“Horses for Courses”; how does one judge “horses” and “courses” in a business enterprise? It’s instructive to look at the context and review how Pandit and Havens were hired in the first place. As Joe Hagan tells it in his comprehensive article in New York magazine, the pair were brought into the bank by Robert Rubin, who acquired their hedge fund for $800 million in 2007. This was a staggering amount, considering the fund had performed poorly in that year, earning less then a money market account. But Rubin saw in Pandit something of himself. Indeed observers say that Vikram Pandit was an “Indian version” of Robert Rubin – an incredibly smart financial engineer but awkward with people and impatient with glad-handling of any kind. This is where John Havens came in; Havens was Pandit’s alter-ego – Mr. Outside to Mr. Inside. He was WASP, born to wealth, married to an heiress and a trader, adept at selling the complex securities that Pandit would construct. They made a dynamic duo.

In any event Rubin argued that by acquiring their hedge fund Citi would get the benefit of Pandit’s formidable intellect and a future of CEO. When the former lawyer, Chuck Prince, stepped down as Citi’s CEO in the wake of billions of subprime losses, Rubin lobbied hard to have Pandit replace him and eventually he had his way. Pandit came into the job as “the smartest guy in the room.”

Continue reading →

Posted in Change, General, Leadership | Tagged CEO succession, change, Citigroup, context, culture, ecocycle, John Havens, Michael Corbat, Michael O'Neill, Robert Rubin, social traps, sweet zone, Vikram Pandit | Comments Off on “Horses for Courses”: Changing the Guard at Citibank

Drucker Forum: Capitalism 2.0 – New Horizons for Managers: Asking the Right Questions

The Drucker Forum, which is taking place in Vienna from November 15 to 16, is now only a month away. It promises to be an excellent conference, with exciting speakers and the promise of great discussions. There will be some hot topics, especially the role of shareholder value and the closely-related subject of executive compensation. Roger Martin, Dean of the Rotman School in Toronto, will no doubt base his argument on his excellent book Fixing the Game and mount the case against shareholder value. Adrian Wooldridge, the Schumpeter columnist for The Economist, will conduct the defense, arguing as he did in Masters of Management for the “crunchiness” of shareholder value and the clarity it lends to assessing performance.

Although executive compensation is not explicitly on the agenda, it can be expected to feature prominently in the discussions. Adrian Wooldridge made the case in favor of current levels, in a recent article entitled “Bargain Bosses: American Bosses are Not Overpaid.”  His case is less persuasive, however, than its headline. He cites the work of Chicago’s Booth School of Business economist, Steven Kaplan. While Kaplan agrees that compensation shot up from 1993 to 2000, he argues that “average estimated pay” (it’s a complex calculation) has declined since then by 46%; median CEO pay is down slightly over the same period. Wooldridge points out that CEOs are now being eclipsed by the top hedge-fund and private-equity managers and concludes that CEO pay is “determined mostly by supply and demand.” Hence the punch line that bosses are “not overpaid”

Continue reading →

Posted in Change, General | Tagged Adrian Wooldridge, Anglo-Saxon capitalism, Bent Flyvbjerg, CEO pay, change, Chicago Booth, complex systems, Fixing the Game, Global Drucker Forum, Gretchen Morgenson, hedge-fund, Masters of Management, Peter Drucker, power, private-equity, Roger Martin, Steven Kaplan, Walter Bagehot | 1 Comment

Management in China: The Problem of Trust

Some weeks back New York Times columnist Tom Friedman wrote an article about China and its perceived lack of ability to innovate. Some say that innovation is not in the Chinese DNA and that their rote education system inhibits their ability to think and act in novel ways. Friedman disagreed with this diagnosis, but argued that they lacked something even more basic: trust. He went on to suggest that the Chinese are caught between two modes of living; the rural society of farms and families where there is trust and an urban society that ought to be governed by the rule of law, but isn’t. This latter mode has not yet developed and indeed some argue that the Communist Party and its monopoly on power have stalled progress.

Friedman held out hope that network innovations like Alibaba.com, which functions rather like eBay and PayPal but on an industrial scale, would introduce a modicum of trust into the society. If this happens, he suggested, we are going to see a lot more innovation coming out of China.

Continue reading →

Posted in Change, Leadership | Tagged Alibaba, Catch-22, change, china, Chinese capitalism, Chinese Family Business, Communist Party, community, Confucian philosophy, expatriate, explicit knowledge, Gordon Redding, gwailo, Hong Kong, innovation, law, management development, markets, nepotism, network, rural, Tom Friedman, trust, urban, virtue | Comments Off on Management in China: The Problem of Trust

Communities of Faith and The Spirit of Capitalism

Last week I asked in the context of the US presidential elections, “Do Mormons Make Better Managers Than Leaders?” The question was intended to be provocative but I do not think it either impolite or improper, especially as well-known HBS professor Clayton Christensen, a devout Mormon, has written that if HBS were a religion it could be Mormonism! So the question could easily have been; “Do HBS (and other business schools) produce better managers than leaders?” But I was interested in the role of communities of faith in business in particular and in capitalism in general.

In The New Ecology of Leadership I show how enterprises are conceived in passion, born in communities of trust and practice, grow through the application of reason and mature in power. In the past, communities of trust and practice have usually been associated with communities of faith. In The Protestant Ethic and the Spirit of Capitalism, sociologist, Max Weber linked the rise of capitalism with the appearance of Protestant sects, where good works and the wealth that accompanied them were seen as a sign of God’s blessing. High achievement motivation and a zeal for education were also advanced as explanatory principles. In Crisis & Renewal I suggested that these “explanations” were uniformly unsatisfactory. They were overly rational, too individualistic and, worst of all, impossible to replicate in modern contexts. In short, they were descriptions, rather than explanations. In addition, of course, forms of capitalism have appeared in many communities that are not Christian.

Continue reading →

Posted in Change, General, Leadership | Tagged achievement motivation, Adam Smith, Anglo-Saxon capitalism, Catholicism, change, chocolate industry, Christian, Clayton Christensen, communities of faith, community, Crisis & Renewal, ecological perspective, education, Harvard Business School, head, innovation, management ethics, Max Weber, moral sentiment, Mormons, Nonconformists, Old Testament, Protestant Ethic, Quakers, religion, Robert Barclay, Rosabeth Moss Kanter, social entrepreneurs, spirit of capitalism, start-up, steel industry, The New Ecology of Leadership | Comments Off on Communities of Faith and The Spirit of Capitalism

Romney and Obama: Do Mormons Make Better Managers than Leaders?

We are into the last six weeks of the presidential election and the contrasts between Mitt Romney and Barack Obama throw light on the sometimes-controversial distinction between managers and leaders. In his 1977 article in the Harvard Business Review “Managers and Leaders: Are They Different?” HBS professor Abraham Zaleznick suggested that they were essentially two different types of personality. Managers got their “sense of self” from perpetuating and strengthening existing institutions, while leaders gained their identity from an ongoing struggle to “alter human and economic relationships”.  Turning to William James’ Varieties of Religious Experience, Zaleznick suggested that managers were “once-born” people whose adjustments to life had been relatively straightforward and in harmony with their environment. He proposed that leaders were “twice-born”, that they had struggled and felt separated from their environment. It is this feeling of alienation that spurred their drive for change.

Continue reading →

Posted in Change, General, Leadership, Strategy, Uncategorized | Tagged Barack Obama, Clayton Christensen, context, David Brooks, Democratic National Convention, George W. Bush, leaders, manager, means and ends, Mitt Romney, Mormon, narrative, pull, push, strategy, Varieties of Religious Experience, William James, Zaleznik | 1 Comment

Essay Based on The New Ecology of Leadership Wins a Top Prize in the Drucker Global Challenge Essay Contest 2012

It’s official! My essay, “Practical Wisdom: Reinventing Work and Reinventing Organizations by Rediscovering Ourselves”, which is based on the ideas in The New Ecology of Leadership, has won a top prize in the Drucker Global Challenge Essay Contest. The organizers will be flying me to Vienna in November to participate in the 4^th Global Drucker Forum and to receive an award. Publication details for the essay will be available in the next few weeks.

The theme of the contest was “Reinventing Work, Reinventing Organization” and contestants were asked:

What do YOU see?

• How will the nature of work and the workforce look like a few years or decades from now?
• Will we still have the traditional corporations with their hierarchies providing the workplace for millions? 
How will SME’s be configured?
• Will all workers ultimately become knowledge workers?
• In which environment will knowledge workers conduct business? Still at a desk at the office, or rather from home? Will they work for one or for several companies and organizations – in a mixture of jobs and parallel careers?
• What will drive and motivate knowledge workers of tomorrow? A good pay? Or perhaps passion and purpose?
• To what extent will the traditional “employee society” evolve into an “entrepreneurial society”?
• Which will be the impact of these structural changes on companies, corporations and organizations and how can they best adapt?
• What role will social entrepreneurs and the non-profit sector play in the future?
• What role will social entrepreneurs and the non-profit sector play in the future?
• What regulatory power will governments and trade unions ideally have?
• And how will the education sector and, last but not least, business schools change – and indeed have to change – to address the challenges of tomorrow?

Contestants were not asked to answer each of the questions but to use them as issues to consider in building a picture of how work and organizations will look in the future.

Continue reading →

Posted in Change, General | Tagged Aristotle, behavioral economics, body and mind, business schools, Cartesian, Descartes, Drucker Challenge, ecological rationality, emotion and reason, employee society, English Enlightenment, entrepreneurial society., evolutionary biology, facts and values, functional silo, Global Drucker Forum, ideas and matter, ideology of reason, innovation, management thought, markets, moral sentiment, neuroscience, Peter Drucker, phronesis, Plato, positive empirical, Reinventing Organization, Reinventing Work, Scottish Enlightenment, social ecology, social entrepreneurs, Spanish treasure, stability and change, Stephen Toulmin, Thirty Years' War, Vienna, World War II | 1 Comment

The “Comeback Kid” Comes Through and the Perils of Improv

Last week I wrote about Clint Eastwood’s unintended highlight speech at the Republican National Convention (RNC) and this week my topic is the Democratic National Convention (DNC). Clint Eastwood has since revealed what he was thinking when he gave his speech. He had refused to be scripted because “I don’t know what I’m going to say”, and got the idea of using the empty chair as a prop when he saw it ten minutes before he addressed the meeting. The risks were huge for, as improv experts will tell you, only a fraction of the ideas in a new improvisation actually work. That is why you want to experiment in front of small, forgiving audiences, where it is safe to fail, and not on national television in a high-stakes moment!

The DNC was quite different from the RNC. Firstly, it was infused with positive emotion for the party’s various causes and united in its support for its candidate. At the RNC, on the other hand, the only shared emotion seemed to be a visceral antipathy toward Barack Obama, with their own candidate leaving them feeling tepid. Secondly, the DNC seemed better organized. Michelle Obama told a compelling story about her marriage to Barack and her concerns about him running for the Presidency. These down-to earth sentiments seemed to resonate broadly and painted her husband as a family man with concerns for “people like us”. Most commentators of whatever stripe admired the speech, except for Charles Krauthammer, the conservative writer for The Washington Post, who described it as “brilliantly cynical”.

Continue reading →

Posted in General, Leadership | Tagged anthropology, Barack Obama, Bill Clinton speech, Charles Krauthammer, Clint Eastwood speech, Comeback Kid, community, Democratice National Convention, hunter-gatherer, improv, improvisation, Lorna Marshall, Michelle Obama speech, Mitch McConnell, Mitt Romney, more perfect union, narrative, religious revival, Republican National Convention, William James, Wittgenstein | 4 Comments

“Go Ahead: Make Our Day” – What Clint Eastwood Might Have Said

The unintended highlight of the Republican National Convention (RNC) last week was Clint Eastwood’s rambling address on Thursday that consumed 13 minutes of precious prime time, delaying Mitt Romney’s acceptance speech. Scheduled for only five minutes in the rigidly scripted program, his improvised question-and-answer session with an imaginary President Obama was baffling rather than inspiring.

What were the organizers thinking? Eastwood had already endorsed the governor in a fundraiser in Sun Valley, Idaho during the summer. Perhaps they believed that Clint could reprise his “Halftime in America” performance in February’s Superbowl advertisement for Chrysler, but in a conservative rather than a commercial cause. There, in two minutes, he had delivered a powerful narrative of passion, challenge and hope. What could he have done in five minutes? The overwhelming need at the RNC was for the party’s speakers to reach out to the undecided voters (the faithful have nowhere else to go). As a fiscal conservative and a social liberal, Eastwood was well positioned to play that role

I have no vote in America, so I do not have to agonize over choices among candidates, but I am a student of leadership. For the Republicans this was a “decisive moment”, when small acts of leadership can make a profound difference, for better or for worse. I let my imagination run free over what Clint might have said:

Continue reading →

Posted in Change, General, Leadership | Tagged Anglo-Saxon capitalism, apathy, Barack Obama, challenge, change, chaos, Clint Eastwood, communities of capitalists, community, cowboy, Democratic National Convention, despair, entertainment, government service, gunslinger, heart, hope, how, identity, individual, meaning, mission, Mitt Romney, narrative, narrative centre of gravity, network, obstacles, passion, political parties, purpose, Republican National Convention, stories, support, tension, trade-off, unemployed, values, what, who, why | 2 Comments

Shareholder Value Part III: A New Narrative for Capitalism

The ripples from Joe Nocera’s August 10 column in The New York Times, “Down With Shareholder Value” continue to radiate throughout the blogosphere. This past week I came across Miguel Padró’s Yahoo blog, “Is ‘Maximizing Shareholder Value’ No Longer the Goal”. In it he outlined the current efforts of the Business and Society Program at The Aspen Institute to “rethink our current narrative of the corporation in society”. Certainly the corporate narrative needs rethinking. For the past thirty years it has been a tale told by economists, who frankly make lacklustre storytellers. Maximizing shareholder value is a Sisyphean task, with no passion and no development. It is a sentence to an eternity of hard labor.

Unfortunately many of the other management writers of the 20th Century didn’t do much better telling the story of the corporation. Their tendency was toward triumphalist accounts of the evolutionary victory of the multidivisional corporate form over lesser modes of organizations like family businesses, partnership, co-operatives and so on. These latter forms of organization were often dismissed as relics of a bygone era: the corporation would conquer all. And for a time it seemed that those forecasts were correct. By 1967, John Kenneth Galbraith was sure that we were living in The New Industrial State, where large firms were concerned only with their maintenance and survival, not with maximizing anything, for that would involve too much risk. According to Galbraith, the outlook for the future was more of the same, and society had to protect itself accordingly, through the use of countervailing power. He was wrong, however, for it was exactly this situation that created the platform for the next stage in the process; the overthrow of managerial capitalism by shareholder capitalism. And overthrow it, it did. Miguel Padró cites an excellent article by Professor Gerald Davis, entitled “The Twilight of the Berle and Means Corporation”, that reveals how much the corporate structure in America has changed over the past decades. For the last twenty years the public corporation in America has been in decline.

Continue reading →

Posted in Change, General, Leadership | Tagged Alexis de Toqueville, Anglo-Saxon capitalism, Aspen Institute, Berle and Means, community capitalism, context, crisis, destruction, ecodynamics, ecological perspective, ecology, English Nonconformists, evolution, externalities, family business, Gerald Davis, hunter-gatherer, Joe Nocera, John Kenneth Galbraith, managerial capitalism, MiguelPadro, narrative, narrative centre of gravity, neoclassical economics, re-localize, renewal, retention, selection, shareholder capitalism, shareholder value model, Sisyphus, The New Industrial State, variation | 1 Comment

From Machines to Plants: Wandering in The Gardens of Democracy

In The New Ecology of Leadership I draw an extended, disciplined analogy between the cycle of an ecosystem (my favourite is a fire-dependent, lodge-pole pine forest) and the trajectories that organizations follow as they go through their lives. The objective is not to predict what will happen to any particular organization but to help managers anticipate what might happen, so that they can take effective action.

The replacement of machine by organic analogies can be a fruitful (pun intended) exercise and recently I was reading The Gardens of Democracy: A New American Story of Citizenship, the Economy, and the Role of Government by Eric Liu and Nick Hanauer. Liu is an author, who used to be a speechwriter and senior domestic policy advisor to Bill Clinton, while Hanauer is a Seattle-based entrepreneur and venture capitalist. Together they have written a short, insightful book that replaces what they call “Machinebrain” with “Gardenbrain” in thinking about politics, economics and government. Their call is for a new mode of “public imagination”.

Continue reading →

Posted in Change, General | Tagged complex systems, destruction, ecological perspective, ecology, economics, Eric Liu, Gardenbrain, Gardens of Democracy, government, hedge-funds, Machinebrain, means and ends, Nick Hanauer, politics, Second Enlightenment, The New Ecology of Leadership | Comments Off on From Machines to Plants: Wandering in The Gardens of Democracy ← Older posts Newer posts →